Employee Corner, HR Corner

What Influences Employee Retention Rates?

Will your employees stay or jump ship? This one aspect can tell.

Employees leaving organizations sooner than imagined is a common concern for most employers. One aspect of the recruitment process is to handle the employee retention rate within the organization for long term stability. Apart from profile screening and background verification, HR personnel are expected to gauge this during the recruitment process.

A Gallup survey found that most American employees, almost 93 percent, advance in their careers by changing jobs. Only seven percent grow within their existing organisations through promotions. The story in India is similar. The reason? Most individuals aspire for career growth and development. They expect organizations to help them shape their careers. When employers fail to do so, their best option is to quit and move to greener pastures.

Employee development

Employee development is a priority for a number of organizations. Companies make strategic investments in employee development in order to strengthen the workforce and assure company success. However, there are many organizations that neglect this aspect even though they are aware of its importance. Such companies end up paying a high price by losing talented staff.

Researchers Monica Hamori, Jie Cao and Baruk Koyuncu conducted interviews with 1200 employees and found that almost 95 percent of the employees engaged in keeping their resumes updated and kept a lookout for prospective employers. They found the reasons:

  • For higher pay. Every time an individual changes jobs, his/her salary increases.
  • No growth in the current organization. “Companies generally satisfy employees’ needs for on-the-job development and the employees’ value these opportunities, which include high-visibility positions and significant increases in responsibility. But they don’t get much in the way of formal development, such as training, mentoring, and coaching—things they also value highly.”

One reason for companies to neglect the aspect of employee development is the fear of losing money spent on development of employees who might not stay. An efficient hiring process that gauges candidates thoroughly is a key necessity in such a precarious situation. Recruitment processes are not only meant to assess a candidate’s practical skills and proficiency in a specific field but also get an understanding of a candidate’s future plans and career aspirations.

External agencies can help

Along with HR departments of organizations, external agencies that offer background check services in India can significantly help in this aspect. For example, reference check or past employment check could reveal a candidate’s past history of job shifts and help in assessing whether or not, the candidate would stay with the organization in the long run. Reference checks could reveal the exact reasons of why an employee changed jobs in the past.

A recent report in the Economic Times revealed that an increasing number of start-ups are expanding employee background checks in India. Another report by SHRM India revealed that more than 15 percent of job applicants share false information on their CVs. The report revealed, that 1.27% of the candidates were found faking their tenure. Whatever may be the reason for faking tenure, it is more important for recruiters to be able to spot these discrepancies. Thorough checks carried out by background verification companies can help in revealing such and other details. These revelations can help in more ways than one. It can help organizations understand why certain situations cause employees to behave in a certain way – in this case, why the employee left a previous job and are there chances of him/her repeating it?

Make sure you’re investing in developing the right employee

Studies show that losing a talented employee can cost 50 percent of the employee’s salary to the company. Hence, it is important for companies to know exactly how much they should invest in the development of a particular employee. An efficient recruitment process can help in understanding this. Thorough background checks, database checks, document verification and profile screening support this aspect of recruiting.

Indian background verification companies like FactSuite are highly proficient in such services that are applicable to Indian companies. It’s just a matter of companies willing to take that extra effort in expanding their recruitment processes to hire the right candidates.

Reasons: https://hbr.org/2012/07/why-top-young-managers-are-in-a-nonstop-job-hunt

Report: https://timesofindia.indiatimes.com/trend-tracking/to-get-hiring-right-startups-are-expanding-background-checks-of-potential-staff/articleshow/59971846.cms

SHRM India: https://www.shrm.org/shrm-india/pages/trends-and-insights-on-background-screening-in-india.aspx